Hometap equity partners review

Our take on Hometap equity partners

Hometap is a home equity sharing agreement company that lets you access funds tied up in your home’s equity without having to make monthly payments. Instead, Hometap will give you up to 25% of your home’s current value in cash — without the need to pay anything back for 10 years.
In exchange for the money that Hometap gives you now, you have to pay Hometap back an agreed-upon percentage of the home’s selling price or appraised value by the end of 10 years or before. It’s called “settling the investment,” and you must pay this sum with:

• Personal savings.
• A home equity or other type of loan.
• The proceeds from your home’s sale.

But depending on the agreement and how much your home is worth at the term’s end or when you sell it, you could be on the hook for tens of thousands of dollars — which you must pay back all at once. If you can’t come up with this amount, you may lose your home.
So unless you’re planning on selling your home or 100% confident you’ll have enough money to pay off the investment, Hometap isn’t the best choice. Instead, consider a home equity loan or home equity line of credit (HELOC).

How does Hometap work?

Working with Hometap involves entering into an investment agreement that provides you with a cash lump sum of your home’s equity. In return, you agree to give Hometap a stake in the value of your home’s future selling price, typically between 5% and 15% of your home’s appraised value.
Hometap is willing to invest as much as $600,000, depending on your home’s value and built-up equity. And the amount of equity you tap into can’t be more than 25% of your home’s total value.
You have up to 10 years to settle the investment, either by sharing the proceeds of your home’s sale or paying off Hometap’s stake. If your home’s value goes up in that time, that’s great for both you and Hometap. If the value of your home goes down, the company shares in your loss.

A deeper look at Hometap on a $200,000 home

Suppose you own a home that’s valued at $200,000. You’re looking to invest about $30,000 into a kitchen renovation, but you aren’t interested in the payments and terms of a home equity loan.
You could instead enter into an investment agreement that offers Hometap a 15% stake in your home — what the company calls the Hometap Share — providing you with $30,000 cash up front:

• Initial home value: $200,000
• 15% equity stake: $30,000

Let’s further say that you hold out on settling Hometap’s investment for the full 10 years of your agreement. If your home appreciates at the 3% national average over that period, it could be worth $268,783 at the end of the decade.
How much you end up paying Hometap to settle comes down to the investment estimate prepared at the time of signing up. Hometap receives an agreed-upon percentage of the total value your home at the time of settlement.

Settling the investment

You must buy out Hometap’s share in the value of your home at the time of settlement. You can pay this amount from your savings, refinance with a loan or give Hometap their percentage from the proceeds of selling your home.

There’s no guarantee that Hometap will make a profit on its investment at the end of the 10-year term. For example, if home values go down, you could end up paying back less than the original investment. However, if prices spike in your area, you will end up paying more. Hometap says that it puts an annual appreciation cap of 20% on the amount of money it can make.

If you find yourself unable to buy out the investment, your agreement allows Hometap the right to force the sale of your home at the end of the 10-year term.

What happens if I renovate my home within that 10-year term?

Hometap doesn’t have a stake in the value of appreciation that’s the result of renovations. So, if the renovation increases the value of your home by $25,000 or more, you can request an adjustment to the investment agreement that excludes the renovation appreciation from the home value used to settle the investment.

That means if you add a bathroom that increases your home’s value by $50,000, you may be able to exclude that $50,000 from the amount used to settle Hometap’s investment percentage.

What costs are associated with Hometap?

No monthly payments is a selling point. But Hometap is not a free service.

Hometap’s 4.5% fee is deducted from the amount you receive, and you can expect to pay a series of other fees to satisfy the agreement.

How does Hometap compare to a home equity loan?

Both Hometap and a home equity loan give you access to the equity you’ve built in your home. But unlike Hometap, with a home equity loan, you’ll know exactly how much you’ll end up paying back at the end of your loan term. While a loan requires approval and a monthly payment, including interest, you can end up paying less in interest if you contribute a little more than required each month.
Here’s what you might pay to borrow $30,000 through a 10-year home equity loan on a $200,000 home:

• Initial home value: $200,000
• Equity payment: $30,000
• Home equity loan interest rate: 5.59%
• Monthly payment: $326.92
• Total paid over 10 years: $39,230

If you’re unable to pay back Hometap’s investment, the company can force the sale of your home. That’s true if you default on a home equity loan as well, but you could end up paying more with Hometap, depending on how much your home appreciates.

How do I qualify for Hometap?

Hometap advertises online prequalification in a few minutes with their initial inquiry on the Hometap site.
Criteria the company considers includes:

• Location. Hometap is available in Arizona, California, Florida, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Utah, Virginia and Washington only.
• Credit score. There's a minimum FICO score requirement of 500.
• Equity. To work with Hometap, you must have built at least 25% equity in your home.
• Resident status. Hometap considers primary residences, rental properties and vacation homes for investment. This includes both single- and multi-family homes and condos.
• Investment amount. The maximum borrowers can invest is under 25% of the total home value, or under $600,000. This amount may be smaller due to other qualifying factors.

Hometap reviews and complaints

Hometap earns a strong 4.9 star rating on Trustpilot based on nearly 3 reviews as of June 2024. Out of all the reviews left for the company, 93% rate Hometap as “Excellent.”

The company is also accredited with the Better Business Bureau (BBB) and earns a B+ based on internal criteria, with eleven complaints in the last three years. While the company is rated 3.88 out of 5 stars, only 32 customers have left a review.

There isn’t much in the way of customer complaints except for the timing required for the process, which can vary due to the availability of home appraisers, documentation and reporting. That’s not unusual, given how new the company is. Still, industry experts warn caution. The top concerns are that investments aren’t regulated like bank loans and aren’t subject to the same scrutiny.

Also, wild fluctuations common in the real estate market can make this kind of investment unpredictable, and no one yet knows the ramifications of this new product.

If you’re looking for other ways to tap into your home equity, consider a home equity loan or home equity line of credit (HELOC). A home equity loan provides a lump sum payout with even monthly payments. And a HELOC is a revolving credit line that you can access whenever you need it (during the draw period, usually 10 years).
Unlike Hometap, you’ll need to make monthly payments with a home equity loan or HELOC, but the payment terms can be customized to fit your needs and you won’t be forced to pay the entire loan back at the end of 10 years. Home equity loans can be a better option if you don’t plan on selling your home or don’t want to get stuck paying a big bill at the end of 10 years.
Compare these lenders and lender marketplaces to find the right home equity product for your needs and lifestyle. Select See rates to get a personalized quote.

How do I get started with Hometap?

Tap into your equity in six steps:

1. Qualify. Go to Hometap’s site and choose Get an Estimate at top right. If your home is in an area where the company invests, Hometap asks for your personal information to run a soft credit check and prepare an estimate.
2. Chat with a rep. If you like how much Hometap is willing to invest, walk through the process with an assigned investment manager.
3. Finish your application. Apply to Hometap’s equity program online.
4. Review and accept your offer. After a third-party home appraisal, Hometap sends you an offer detailing how much equity you can tap into and the amount of Hometap’s share.
5. Attend closing. Confirm where you’ll meet to sign the papers.
6. Get your money. Hometap wires the money into your bank account a few days later, leaving you to use the money as you see fit.

Frequently asked questions

When will Hometap inspect my home during the 10-year term?
As long as you keep paying your taxes, insurance and mortgage payments, you won’t hear from Hometap at all during the term of your investment agreement.
What happens if I die before the end of the term?
Hometap’s stake in the home is essentially a lien against it. If you’re the homeowner, the obligation to pay back the investment shifts to your estate if you die before the agreement is settled.
What if my house is destroyed by fire or storm over the course of the agreement?
You owe Hometap its share of the value of the home before the disaster, as determined by a home appraiser.